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If my flat is my pension do I need to extend the lease?
41Oscar
Posts: 4 Newbie
I have a flat with 64 years left on the lease. I can't afford the lease extension which is likely to be over £10k and my mortgage company is unable to loan me the money.
My original plan was to use the flat's rental income as a pension once the mortgage is paid off (in 20 years time). Is it really necessary therefore, to extend the lease? Apart from difficulty selling the flat if I don't extend the lease are there any other disadvantages? Advice much appreciated
My original plan was to use the flat's rental income as a pension once the mortgage is paid off (in 20 years time). Is it really necessary therefore, to extend the lease? Apart from difficulty selling the flat if I don't extend the lease are there any other disadvantages? Advice much appreciated
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Comments
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For rental, no problem at all. But it will be pretty hard to sell should you need to release or raise cash.0
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What happens when the lease runs out? Can the freeholder take the flat back? I'm genuinely curious as we don't have this freeholder/leaseholder thing in Scotland. When you buy a property you buy it, not a lease.0
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Have you shopped around for mortgages? Or seen a broker?"Real knowledge is to know the extent of one's ignorance" - Confucius0
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U become a tenant of the freeholder, they take back the lease. The value is going to be very low. I had a 100 % retainer on the flat I was buying with a 72 year lease and that was being renewed as part of the sale!0
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I have a flat with 64 years left on the lease. I can't afford the lease extension which is likely to be over £10k and my mortgage company is unable to loan me the money.
My original plan was to use the flat's rental income as a pension once the mortgage is paid off (in 20 years time). Is it really necessary therefore, to extend the lease? Apart from difficulty selling the flat if I don't extend the lease are there any other disadvantages? Advice much appreciated
You have an asset that is decreasing in value you need to extend the lease it will only get more expensive to do so.0 -
Thank you very much to everyone who replied. I will continue to search for another broker. Wish we had the same system as Scotland without leases. They're a nightmare.0
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You probably should extend the lease. Most mortgages will not be available to you with a short lease. If you need to refinance at any point then you will have limited options. This is only not an issue if you already have a low LTV very cheap tracker mortgage you are always going to be happy to stick with.
Also, if you do need to sell (you may not want to be a landlord at age 90, or may have to sell to fund care) then you will be in a much worse position.
Otherwise, it is an option to let it run down. But those are two fairly serious reasons.
Remember as the lease gets shorter, the increase in costs accelerates.0
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